UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
AN ACT relating to small business.
Be it enacted by the General Assembly of the Commonwealth of Kentucky:
SECTION 1. A NEW SECTION OF SUBCHAPTER 12 OF KRS CHAPTER 154
IS CREATED TO READ AS FOLLOWS:
The General Assembly finds that:
(1) Small business is the backbone of our state's economy;
(2) Administrative rules promulgated by state agencies can have an unduly
burdensome impact on the growth and vitality of small business;
(3) State agencies need to consult with the small business community when
promulgating administrative regulations to better assess their impact and to
consider alternatives that will ease the impact of administrative regulations on
small business;
(4) Small businesses need to better utilize the administrative regulation review
process to provide more input and to be aware of the impact of administrative
regulations;
(5) An independent advisory council needs to consider the concerns of small
businesses and make recommendations to adopt, amend, or repeal administrative
regulations;
(6) An administrative body's interpretation or application of its administrative
regulations may also have a disproportionately burdensome impact on a small
business especially when the small business lacks the resources to contest an
administrative body's interpretation or application of an administrative
regulation that imposes a fine, citation, or penalty; and
(7) The state's business climate will be improved by assisting small businesses in
challenging an administrative body's administrative regulations that carry
penalty provisions by providing an opportunity for compliance without the
assessment of monetary fines and providing a business defender to challenge
Page 1 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
citations and fines that may be unfairly or unnecessarily assessed against a small
business.
SECTION 2. A NEW SECTION OF SUBCHAPTER 12 OF KRS CHAPTER 154
IS CREATED TO READ AS FOLLOWS:
As used in Sections 1 to 7 and Sections 8, 9, 10, and 11 of this Act:
(1) "Administrative body" means each state board, bureau, cabinet, commission,
department, authority, officer, or other entity, except the General Assembly and
the Court of Justice, authorized by law to promulgate administrative regulations;
(2) "Affected small businesses" or "affects small business" means any potential or
actual requirement imposed upon a small business through an administrative
body's proposed or adopted administrative regulation that will cause a direct and
significant economic burden upon a small business, or that is directly related to
the formation, operation, or expansion of a small business;
(3) "Adopted" means that an administrative regulation has become effective in
accordance with the provisions of KRS Chapter 13A;
(4) "Promulgate" means that an administrative body has approved an administrative
regulation for filing with the Legislative Research Commission in accordance
with the provisions of KRS Chapter 13A; and
(5) "Small business" means a for-profit enterprise that meets the small business size
standards as defined in Part 121 of Title 13 of the Code of Federal Regulations.
SECTION 3. A NEW SECTION OF SUBCHAPTER 12 OF KRS CHAPTER 154
IS CREATED TO READ AS FOLLOWS:
(1) There shall be established within and administratively attached to every cabinet
or agency of the state whose administrative regulations affect small business
activities an advisory committee on small business.
(2) The advisory committee shall consist of three (3) or more odd number of
members appointed by the cabinet or agency and may advise more than one (1)
Page 2 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
department within the cabinet or agency. The cabinet or agency shall have the
authority to appoint members to the advisory council and to fill any vacancies.
The members shall serve on a volunteer basis for a period of no more than two
(2) years and have experience or knowledge of the effect of regulation by those
cabinets or agencies on the formation, operation, or expansion of a small
business.
(3) No person shall serve on an advisory committee on small business and the Small
Business Advisory Council concurrently.
SECTION 4. A NEW SECTION OF SUBCHAPTER 12 OF KRS CHAPTER 154
IS CREATED TO READ AS FOLLOWS:
(1) When an administrative body is proposing an administrative regulation that
affects small business, it shall consult with the administratively attached
departmental advisory committee on small business regarding any matter related
to the proposed administrative regulation prior to complying with the
requirements for promulgating administrative regulations provided in KRS
Chapter 13A.
(2) Each administrative body shall develop its own internal management procedures
for soliciting comments during the drafting of proposed administrative
regulations from owners or officers of affected small businesses. The
administrative body may develop creative procedures for the solicitation of
comments from affected small business owners during the drafting or
development of proposed administrative regulations.
(3) Administrative bodies may also consult any group or members of affected small
businesses to formulate relevant language, develop criteria, and provide any
other expertise to insure that the proposed administrative regulation will be
drafted in a manner that will protect public health, welfare, and safety without
placing an undue and significant burden upon small business.
Page 3 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
SECTION 5. A NEW SECTION OF SUBCHAPTER 12 OF KRS CHAPTER 154
IS CREATED TO READ AS FOLLOWS:
(1) Any affected small business may file a written petition with the Small Business
Advisory Council objecting to all or part of the administrative regulation
affecting small business on any of the following grounds:
(a) The actual effect on small business is not reflected in, or significantly
exceeds, the small business impact statement submitted prior to the
promulgation of the administrative regulation;
(b) The small business impact statement does not consider new or significant
economic information that reveals an undue impact on small business; or
(c) These impacts were not previously considered at the public hearing on the
administrative regulation.
(2) For administrative regulations adopted prior to the effective date of this Act, an
affected small business may file a written petition with the Small Business
Advisory Council objecting to all or part of any administrative regulation
affecting small business on any of the following grounds:
(a) The administrative regulation creates an undue barrier to the formation,
operation, and expansion of small businesses in a manner that significantly
outweighs its benefit to the public;
(b) The administrative regulation duplicates, overlaps, or conflicts with
administrative regulations adopted by another administrative body or
violates the substantive authority under which the administrative regulation
was adopted; or
(c) The technology, economic conditions, or other relevant factors justifying
the purpose for the administrative regulation have changed or no longer
exist.
Page 4 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
(3) Upon submission of the petition, the council shall forward the petition to the
administrative body promulgating the administrative regulation. The
administrative body shall promptly seek advice and counsel regarding the petition
from the appropriate departmental advisory committee on small business. The
administrative body shall determine whether or not the impact statement or the
public hearing addressed the actual and significant impact on small business.
(4) The administrative body shall submit a written response of its determination to
the Small Business Advisory Council within sixty (60) days after receipt of the
petition.
(5) If the administrative body determines that the petition merits the promulgation,
amendment, or repeal of an administrative regulation, it may initiate proceedings
in accordance with KRS Chapter 13A.
(6) If the administrative body determines that the petition does not merit the
promulgation, amendment, or repeal of an administrative regulation, any
affected small business may seek a review of the decision by the Small Business
Advisory Council. The council shall solicit testimony that will assist in its
determination whether to recommend that the administrative body initiate
proceedings in accordance with KRS Chapter 13A, and if so, what those
proceedings should be.
(7) For administrative regulations adopted after the effective date of this Act, the
council may base its recommendation made under subsection (6) of this section
on any of the following reasons:
(a) The actual affect on small business was not reflected in, or significantly
exceeded, the impact statement submitted prior to the adoption of the
administrative regulation;
(b) The impact statement did not consider new or significant economic
information that reveals an undue impact on small business; or
Page 5 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
(c) These impacts were not previously considered at the public hearing on the
administrative regulation.
(8) For administrative regulations adopted before the effective date of this Act, the
council may base its recommendation made under subsection (6) of this section
to the administrative body on any of the following reasons:
(a) The administrative regulation creates an undue barrier to the formation,
operation, and expansion of small businesses in the state in a manner that
significantly outweighs its benefit to the public;
(b) The administrative regulation duplicates, overlaps, or conflicts with
administrative regulations adopted by another administrative body or
violates the substantive authority under which the administrative regulation
was adopted; and
(c) The technology, economic conditions, or other relevant factors justifying
the purpose for the administrative regulation have changed or no longer
exist.
(9) If the Small Business Advisory Council recommends that an administrative body
initiate administrative regulation making proceedings for any reason provided in
subsection (7) or (8) of this section, it shall submit an evaluation report and the
administrative body's written response as provided in subsection (4) of this
section to the legislature. The legislature may subsequently take action in
response to the evaluation report and the administrative body's response as it
finds appropriate.
SECTION 6. A NEW SECTION OF SUBCHAPTER 12 OF KRS CHAPTER 154
IS CREATED TO READ AS FOLLOWS:
(1) Each administrative body having administrative regulations that affect small
business in effect on the effective date of this Act, shall by June 30 of each odd
numbered year, submit a list of those administrative regulations to the Small
Page 6 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
Business Advisory Council. The administrative body shall also submit a report
describing the specific public purpose or interest for promulgating each
administrative regulation and any other reasons to justify its continued
implementation.
(2) In addition to the petitions received under Section 5 of this Act, the Small
Business Advisory Council shall provide to the head of each administrative body
on a regular basis a list of administrative regulations adopted by the
administrative body that affect small business and that have generated
complaints or concerns, including any administrative regulation that the council
determines may duplicate, overlap, or conflict with other administrative
regulations, or exceed statutory authority. Within forty-five (45) days after being
notified by the council of the list, the administrative body shall submit a written
report to the council in response to the complaints or concerns. The
administrative body shall also state whether the administrative body has
considered the continued need for the administrative regulation and the degree to
which technology, economic conditions, and other relevant factors may have
diminished or eliminated the need for maintaining the administrative regulation.
(3) The council may solicit testimony from the public regarding any report submitted
by the administrative body under this section at a public meeting. Upon
consideration of any report submitted by an administrative body under this
section and any public testimony, the Small Business Advisory Council shall
submit an evaluation report to the legislature by October 1st of odd-numbered
years. The evaluation report shall include an assessment as to whether the public
interest significantly outweighs an administrative regulation's effect on small
business and any legislative proposal to eliminate or reduce the effect on small
business. The legislature may take action in response to the report as it finds
appropriate.
Page 7 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
SECTION 7. A NEW SECTION OF SUBCHAPTER 12 OF KRS CHAPTER 154
IS CREATED TO READ AS FOLLOWS:
(1) Any administrative body authorized to assess civil penalties or fines upon a small
business shall waive or reduce any penalty or fine as allowed by federal or state
law for a violation of any statute, ordinance, or administrative regulation by a
small business under the following conditions:
(a) The small business corrects the violations within a minimum of thirty (30)
days after receipt of a notice of violation or citation; and
(b) The violation was unintentional or the result of excusable neglect; or
(c) The violation was the result of an excusable misunderstanding of an
administrative body's interpretation of an administrative regulation.
(2) Subsection (1) of this section shall not apply when:
(a) A small business fails to exercise good faith in complying with the statute or
administrative regulation;
(b) A violation involves willful or criminal conduct; or
(c) A violation results in serious health, safety, or environmental impact.
(3) An administrative body may adopt administrative regulations to implement the
requirements of this section.
Section 8. KRS 154.12-215 is amended to read as follows:
(1) The duties of the Department of Community Development shall include but not be
limited to:
(a) Collecting, summarizing, and disseminating information helpful to minority
businesses, including information on:
1. Market research;
2. New business opportunities;
3. Federal, state, and local minority business programs; and
Page 8 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
4. The availability of managerial assistance programs within the state
educational system;
(b) Assisting minority businesses with federal, state, and local government
agencies, regulations, and procurement programs.
(c) Providing staff assistance to the council;
(d) Providing information on federal, state, and local small business programs and
regulations;
(e) Making referrals to managerial assistance programs within the state
educational system; and
(f) Introducing entrepreneurs to individual investors and to investment capital
firms interested in start-up and early-stage financing.
(2) The commissioner is designated a small business ombudsman and shall:
(a) Receive and refer complaints of small business to the council and the
appropriate administrative bodies;
(b) Coordinate the activities of all administrative bodies performing functions
affecting the operation of small business in the Commonwealth;
(c) Represent the interests of the council and small businesses in the
Commonwealth before federal, state, and local administration and regulatory
agencies;
(d) Appoint a small business defender to represent, defend, and provide legal
representation to any small business during any adjudicatory or contested
proceeding involving any civil citation issued by an administrative body in
which the small business is a party, provided that the small business shall
seek its own legal representation whenever the potential remedies against
the small business may include fines or penalties that exceed twenty-five
thousand dollars ($25,000) or may result in the suspension or revocation of
a license. The small business defender shall have the discretion to accept or
Page 9 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
refuse any case for good cause. The small business defender may also
engage in the following activities:
1. Advocate and negotiate, upon consultation with the council and with
federal and state agencies and officials on any matter relating to and
promoting the interests of small business;
2. Conduct investigations to secure information useful in the lawful
administration of any provision of this section, Sections 1 to 7, and
Sections 9, 10, and 11 of this Act;
3. Refer any appropriate matter to the legislature for examination or
investigation; and
4. Do any and all things necessary to effectuate the purposes of this
section, Sections 1 to 7, and Sections 9, 10, and 11 of this Act; and
(e)[(d)] Prepare an annual report of the activities and recommendations of the
council and submit the report to the Governor and the appropriate legislative
committee having jurisdiction over small business matters.
(3) Small businesses shall waive and release any and all claims, damages, causes of
action, and any requests for relief made against the small business defender and
the state, its officers, employees, or agents, arising from the legal representation
of the small business by the small business defender provided under this section.
Section 9. KRS 154.12-218 is amended to read as follows:
(1) There is established a Small Business Advisory Council to consider any request
from small business owners for review of any administrative regulation adopted
by an administrative body and to make recommendations to the administrative
body or the legislature regarding the need for a change in the administrative
regulation or in legislation[which shall serve in an advisory capacity to the
Department of Community Development].
Page 10 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
(2) The council shall be composed of eleven (11)[ten (10)] members who are officers
or representatives of small businesses. The members of the council shall be
appointed by the Governor for four (4) year terms, except that five (5) of the initial
members shall be appointed for two (2) year terms. After the initial appointments,
nominations shall be made from names submitted by any and all of the
departmental advisory committees on small business. Members may be
reappointed. The appointments shall reflect representation of a variety of small
businesses in the state, provided that no more than two (2) members shall be
representatives from the same type of small business or from the same
congressional district.
(3) Members of the council shall serve without compensation, but shall be reimbursed
for their necessary travel expenses actually incurred in the discharge of their duties
on the council.
(4) The council shall meet as soon as practicable after the initial eleven (11)[ten (10)]
members are appointed, and thereafter shall meet on a monthly basis[at least twice
a year and at the call of the director]. The council shall annually elect one (1) of its
members to serve as chairperson, who shall serve a term of one (1) year, unless
removed earlier by a two-thirds (2/3) vote of all members of the
council[chairman].
(5) A majority of all the members of the council shall constitute a quorum to do
business, and the concurrence of a majority of all the members shall be necessary
to make any action of the council valid.
(6) In addition to any other powers provided by this section, Sections 1 to 7, and
Section 11 of this Act, the council may adopt any administrative regulations
necessary to implement the provisions of those sections; organize and hold
conferences on problems affecting small business; and do any and all things
necessary to effectuate the purposes of those sections .
Page 11 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
(7) The council shall:
(a) Receive and review petitions submitted under Section 5 of this Act[Serve as
a source of expertise and information on small businesses to the department;
(b) Review decisions of administrative bodies regarding the promulgation,
adoption, amendment, or repeal of an administrative regulation[Keep the
department informed with respect to problems of, and matters affecting, small
businesses]; and
(c) Advise the department, upon request of the department, with respect to any
matters relating to small businesses.
Section 10. KRS 13A.017 is amended to read as follows:
(1) Following a public hearing on a proposed administrative regulation held pursuant to
the provisions of KRS 13A.015, the administrative body shall give consideration to
all comments received or made prior to the adjournment of the public hearing, or
prior to the cancellation of the public hearing.
(2) The administrative body shall file with the Commission within forty-five (45) days
following the date the public hearing was scheduled, a statement:
(a) Identifying the persons who submitted written comments, or attended the
public hearing; and
(b) Containing a summary of the:
1. Comments received or made at the public hearing; and
2. Its response to the comments.
(3) In addition to the statement in subsection (2) of this section, for any proposed
administrative regulation that affects small business, the administrative body
shall also submit a small business statement to the Small Business Advisory
Council and the departmental advisory committee within forty-five (45) days
following the date the public hearing was scheduled. The small business
statement shall include a description of how opinions or comments from affected
Page 12 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
small business were solicited, a summary of the public and small business
comments, and a summary of the administrative body's response to those
comments.
(4) The administrative body shall provide a copy of the summary to any person who
attended the public hearing and requested that a copy of the summary be provided.
(5)[(4)] The regulations compiler shall transmit a copy of the summary to a legislator
upon request.
(6)[(5)] If the administrative body promulgates an administrative regulation that was
the subject of a public hearing required under the provisions of this section and
KRS 13A.015, the regulations compiler shall transmit a copy of the summary to a
legislator upon request.
(7)[(6)] The administrative body shall provide a copy of the summary to persons who
attended the public hearing and requested that a copy of the summary be provided.
(8)[(7)] If an administrative body determines that it will file an administrative
regulation, it shall file the administrative regulation for which a notice of intent was
filed within one hundred eighty (180) days of the date on which the notice-of-intent
public hearing was scheduled.
(9)[(8)] If the administrative body determines that it will not file an ordinary
administrative regulation for which a notice of intent was filed, it shall notify the
regulations compiler of its determination, in writing, within one hundred eighty
(180) days of the date on which the notice-of-intent public hearing was scheduled.
Section 11. KRS 13A.240 is amended to read as follows:
(1) Every administrative body shall prepare and submit to the Legislative Research
Commission an original and five (5) duplicate copies of a regulatory impact analysis
for every administrative regulation when it is filed with the Commission. The
regulatory impact analysis shall include, but not be limited to, the following
information:
Page 13 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
(a) The type and number of individuals, businesses, organizations, and state and
local governments affected by the administrative regulation; and
(b) The direct and indirect costs or savings, including, to the extent available from
the public comments received, the:
1. Effect on the cost of living and employment in the geographical area in
which the administrative regulation will be implemented; and
2. Effect on the cost of doing business in the geographical area in which
the administrative regulation will be implemented; and
3. Compliance, reporting, and paperwork requirements of the
administrative regulation on those affected for the first year following
the implementation of the administrative regulation, and the continuing
costs or savings for the second and subsequent years with any factors
which might increase or decrease the cost of the administrative
regulation, including the effect on competition being noted; and
(c) The direct and indirect costs or savings and paperwork requirements to the
promulgating administrative body for the administration and enforcement of
the administrative regulation for the first year following the implementation of
the administrative regulation, and the continuing costs or savings for the
second year with any factors which might increase or decrease the cost of the
administrative regulation being noted; and
(d) An assessment of any anticipated effect on state and local revenues; and
(e) The source of the revenue to be used for the implementation and enforcement
of the administrative regulation; and
(f) To the extent available from the public comments received, the economic
impact of the administrative regulation on the geographical area in which the
administrative regulation will be implemented, and on the state, including the
Page 14 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
effects of the economic activities arising from the administrative regulation;
and
(g) An assessment of alternative methods for accomplishing the purpose of the
administrative regulation and the reasons why they were rejected in favor of
the administrative regulation; and
(h) An assessment of the expected benefits of the administrative regulation; and
(i) A statement:
1. Identifying the effects of the administrative regulation on the public
health and environmental welfare of the geographical area in which the
administrative regulation will be implemented and upon the state; and
2. Stating whether there would be a detrimental effect on the environment
and public health if the administrative regulation is not implemented;
and
3. If there would be a detrimental effect on the environment and public
health, an explanation of the detrimental effect; and
(j) A written statement identifying any statute, rule, regulation, or governmental
policy which the administrative regulation may be in conflict with, overlap, or
duplicate; and a written statement for the necessity to promulgate the
administrative regulation if conflict, overlapping, or duplication is found to
exist. The administrative body shall also indicate whether or not any effort has
been made to harmonize the administrative regulation with any statute, rule,
regulation, or governmental policy with which it has been found to be in
conflict; and
(k) A statement:
1. Identifying whether the administrative regulation affects small
business, and if so, the availability and practicability of less restrictive
alternatives that could be implemented; and
Page 15 of 16
BR235100.100-2351
UNOFFICIAL COPY AS OF 11/14/2011 1998 REG. SESS. 98 RS BR 2351
2. Offering creative, innovative, or flexible methods of compliance for
small businesses; and
3. Explaining the methods considered by the administrative body to
reduce the impact on small business such as consolidation,
simplification, differing compliance or reporting requirements, less
stringent deadlines, modification of the fines schedule, performance
rather than design standards, exemption, or any other mitigating
techniques; and
4. Explaining how the administrative body involved small business in the
development of the administrative regulation.
(2) The Legislative Research Commission shall review all regulatory impact analyses
submitted by all administrative bodies, and prepare a written analysis thereof and of
the administrative regulation. The Legislative Research Commission may require
any administrative body to submit background data upon which the information
required by subsection (1) is based, and an explanation of how the data was
gathered.
(3) The departmental advisory committee on small business created under Section 3
of this Act and the Small Business Advisory Council shall review all regulatory
impact analyses submitted by administrative bodies that affect small business.
Page 16 of 16
BR235100.100-2351